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[PTTG??]

Or we could just close off tax loopholes and bring in more tax revenue.

*Washington goes berserk at mention of obvious solution*

The funny thing is- and let me be clear here, I hate democrats (they are not liberal enough)- they have been proposing that very thing, and the republicans are refusing it, since it is, in their mind, a tax increase.

They literally believe that it is worth damaging the country's formerly perfect credit rating to protect billionaires from loosing private jet tax rebates.

[Nadaka]

Closing loopholes alone is unlikely to produce the 30 to 40 percent increase in revenue we need. Unesslof course those are loopholes big enough to fly a planet through.

[PTTG??]

Closing loopholes alone is unlikely to produce the 30 to 40 percent increase in revenue we need. Unesslof course those are loopholes big enough to fly a planet through.

There's that too. Particularly the Jet loopholes- they are only a fractional percentage of tax income there- but we could start with forcing American companies to pay American taxes. I for one have always felt that any company that does business in the US at all should be required to pay US taxes. Tax havens wouldn't help them that way.

[Bauglir]

Actually, why aren't taxes assessed based on the percentage of a business'... business done in a certain country? Sell X% of your goods in Country Y, pay X% of what Country Y would tax you if you were based there. Essentially. Obviously it's more complicated and you need mechanisms to ensure no transaction gets taxed twice among other things, which is probably actually the answer to my question, but still, it seems an obvious goal to work toward.

[nenjin]

That would imply that anyone who has ever done business in the United States, or continues to do business, is under Federal Jurisdiction for control of their profits regardless of how they're obtained. Businesses would find that very hard to swallow. It's kind of like saying "If you ever bring your money into America, we can bill you for all the money you make world-wide."
 
On the other hand, when you can draw a direct link between how business is done in one country, and how it impacts that businesses' performance and execution of services in America.....(i.e. hiring wage slaves in another country who provide terrible service (let's say tech CS for starters) to Americans, yet the company bills us out the ying yang and reaps huge windfalls because of it), that's something that I think the gov't has a little more leeway in stepping in, in the name of protecting American consumers at the very least.

Obviously that's still murky and difficult for businesses to swallow, and even more difficult for free market proponents to get behind, since they'd claim the market would adjust to not deal with businesses who provide terrible service for an exorbitant price.

And it is somewhat of a slippery slope. What's to stop other countries from saying "you know, I think McDonalds should pay taxes in Japan based on the total volume of business they do world-wide, not just payroll and sales taxes for their Japanese stores." If other countries tried to tax American corporations based on their reported revenue in America.....they'd never diversify their holdings outside the US because they'd always be held to the highest tax amount possible.

[Nadaka]

Actually, why aren't taxes assessed based on the percentage of a business'... business done in a certain country? Sell X% of your goods in Country Y, pay X% of what Country Y would tax you if you were based there. Essentially. Obviously it's more complicated and you need mechanisms to ensure no transaction gets taxed twice among other things, which is probably actually the answer to my question, but still, it seems an obvious goal to work toward.

That would only be possible with a sales and service tax rather than a corporate income tax, because it would be very easy to use shell companies and "massaged" books to minimize tax payouts. Of course, they already are using shell companies and "massaged" books to minimize taxes.

I can wrap my head around the issues with taxing people easily enough. But corporations add a huge amount of complexity, and I don't even know where to begin poking at that knot.

[Zangi]

About the everyone favorite "tax cut". It simply not true that the government is cutting tax for 30 years.

Spoiler (click to show/hide)

*SNIP*
P.S if you are wondering why US government haven't already drowning in debts. Here is another charts of the total revenue and spending.

Spoiler (click to show/hide)

*SNIP*

Damned career politicians.

[Nadaka]

The tax rate definitely has been falling dramatically over the last 30 years (and the whole century actually. The reason that the tax revenue has remained relatively stable is that the economy has grown dramatically due to technological innovation.

[Bauglir]

-snip-

Hm... I'm not sure if I was clear or not, but I intended to address specifically the problem of multiple countries taxing a business as if it were based there (which is that they get absolutely crushed by being taxed once for every country they do business in, for every transaction). Tax only transactions made with customers in a given country with that country's tax rates. For the sake of argument, let us say you are a steel manufacturer and you do business in, let's say, the US, Japan, and China. Completely fabricating tax rates (I will eat my hat if these are reasonable numbers in absolute terms OR relative to one another), let's say that the US charges a 5% tax on steel sales, Japan 4%, and China 8%, and you sell 33% of your product in each by some ridiculous happenstance.

1/3 of your income from steel sales is taxed 5%, and paid to the US.
1/3 is taxed 4% and paid to Japan.
1/3 is taxed 8% and paid to China.

Essentially, only the money that passes through the US is subject to US taxation, and in any year you do no business in the US, 0% of your income from steel sales is taxed 5%. What's to stop people from saying the taxes ought to be expanded to ALL of a corporation's income is, well, your entire argument.

Disclaimer: (and a reply to Nadaka) I recognize that it complicates tax law even further than it already is, which is a pretty bad thing, but it does at least seem like the sensible solution to this whole "tax havens" thingy as a principle to aim for, if not one that can be perfectly recognized. So again, this is a naive concept that would need difficult implementation, but at the moment I haven't yet figured out why it would be any worse than the status quo.

[counting]

The tax rate definitely has been falling dramatically over the last 30 years (and the whole century actually. The reason that the tax revenue has remained relatively stable is that the economy has grown dramatically due to technological innovation.

It's percentage compare to the GDP ALREADY. And although it's the whole government revenue, but if you see this 100 years charts. You will see the individual income tax following almost exactly as the same trends. And it clearly shows that tax rate are not cut (majorly in a long period) for 30years. It's not even changed a lot in 50 years. It means every $100 earned domestically, certain percent is going into government pocket. The absolute number changed, but the ratio does NOT. And the most recent cut ONLY happened at the beginning of Bush government, and at the economic crisis. (The composition of tax buckets may change but the over-all tax collected were maintaining a certain level. It cut one place and another one is added somewhere else, nothing is changed in the big picture) 

Spoiler (click to show/hide)

[PTTG??]

It's percentage compare to the GDP ALREADY. And although it's the whole government revenue, but if you see this 100 years charts.

That's hard to understand. Would you care to rephrase that?

[Lord Shonus]

According to the chart you posted, counting, individual taxes fell from around 14% of GDP in 1969 to 6% in 2010, a cut of nearly 50%.

[counting]

According to the chart you posted, counting, individual taxes fell from around 14% of GDP in 1969 to 6% in 2010, a cut of nearly 50%.

Just the bottom blue part, purple is insurance (payroll) tax (which is not voluntary like your 401k, it's must pay). Red is corporate tax. Read the fine prints on the right side. Individual tax is always near 8% (to federal government). The one got cut is corporate tax. These taxes are collected separately. Like you may still need to pay the insurance tax, and in some states pay the state/local income tax.

That's hard to understand. Would you care to rephrase that?

Imagine that every person in the country earns a certain amount of money by either salary or profit from capitals (company profit, selling house, rent out rooms, etc). And assuming people all earn the same amount. Let's see if in 1960 your earning was $4000/year, then you had to paid the individual income tax of 10% for the federal government, minus some tax returns, equal to an effective tax rate 7% collected by the government. By this, each individual had to pay $4000*7% = $280. And if there were 100 million workers in US (1960), the overall production value (roughly = GDP) was $4,000*100 million = 400 billion. Thus the federal government got 7% of the 400 billion = 28 billion in income tax.

Then in 2000. If the whole GDP was 10 trillion, and the government colloected total 700 billion income tax from individual. Also there were estimate 200 million workers in the US. Hence we also got the 700/10,000 = 7% effective tax rate. Since the average earning for a worker was ($10 trillion / 200 million people) = $50,000 per year, and the real effective tax rate was still 7%. Hence each one needed to give the government $50,000*7% = $3,500 on average. (regardless what his/her income basket was). I reverse this calculate in here, for the purpose to tell that its just an over all average, and it can be calculated either way. So whether in 1960 or 2000, the worker should all feel the same effective tax rate in life, despite the huge difference in actual earnings in different time.

However people have different earnings with each other in real life too, hence different groups of income buckets have different tax rate, but on average it is 7%. Nonetheless, the composition of rich and poor are also different and changing over time, so the actually feeling although theoretically the same, people may still feel differently accordingly. The closer to current time, the richer gets richer, and most of the income tax is paid by the top 20%-income-bucket group. In effect that general population as working class would pay less and less in proportion to the rich people. I believe this is the reason why most people felt the tax is being cut for many years. (The portion got cut in middle class, was made up by the tax raised to upper class)

A large part of the growing government revenue now comes from insurance tax department, along with state/local tax. Since they're easier to raise and increase the over all revenue without touching the sensitive individual income tax. As long as people think they are paying less tax directly, people are happy. But in reality the government just take money from else where. (either in different income group, or with different reasons). The government can cut your income tax, but raise the corporate tax, hence the corporation has to sell it's products more expensive. In the end, the customers still paid the "indirect tax" through corporate tax. And the statistic about "actual tax" pressure to a working class person shows, he/she needs to paid directly or indirectly combined up to 30% tax rate from his/her income these days.

[nenjin]

Disclaimer: (and a reply to Nadaka) I recognize that it complicates tax law even further than it already is, which is a pretty bad thing, but it does at least seem like the sensible solution to this whole "tax havens" thingy as a principle to aim for, if not one that can be perfectly recognized. So again, this is a naive concept that would need difficult implementation, but at the moment I haven't yet figured out why it would be any worse than the status quo.

I think it just calls for an international organization to mediate and centralize the taxation of multi-national corporations' profits. Which has about a snowball's chance in hell of ever happening with the support of US businesses and politicians. It isn't to the advantage of businesses to have a level playing field.

Mostly what pisses me off about the whole situation is that it feels like the largest businesses in America sell us goods at ever increasing prices that weren't made here, and pay our workers for the work they DO get to do pretty much the same unless they're forced to.

[counting]

About taxes in domestic or foreign (of different governments, or even different states in US), there are rules regarding how to divide the taxable profit already. It's base on formulary apportionment to separate the tax revenue between different parties (using sales, property, salary, etc as standards). In practice, since it's natural for an international corporation to base its headquarter in just 1 country, so the government of the country where headquarter is situated will always try to collect the tax of the entire corporation. Since it's not fair to tax twice of the same sale, hence once the foreign branch already paid the tax to the foreign government, the corporation will gets a foreign tax credit to prove that it had paid the tax in that country. This credential will then be used for the tax deduction.

And here is where the problems hidden, since every country has different accounting rules, so it's possible a corporation can avoid tax using loopholes. Imagine a corporate has profit loss calculated by the accounting laws of the country_A where its headquarter is suited, so it is exempted from gross income tax in country_A. But using the accounting laws where its branch is situated in country_B will give a positive profit result, hence the government_B wants to collect tax from its branch. However since the profit is calculated by {sales amount minus cost during production}, and different accounting rules have different standards to determine what the costs are. So many corporations use accounting methods to register part of its production costs from country A into country B to increase the cost there. In this way, gross profits in countries A and B will be both negative -> no tax is paid.

In reality, many loopholes like this are implemented to a greater extend for minimizing the overall taxes. Hence many accounting rules begin to be more universal in different countries. But as long as there are places/countries existed as tax exemption heavens, there will always be loopholes for corporation tax. (And account for why corporation tax are decreasing over the years). Many countries has modified their laws of incorporate different taxes. And by combining corporate tax with individual income tax, it's possible to have an international corporation branch all over the world, but only being taxed according to its owners and shareholders (people can not exist in 2 places at the same time). The government only needs to control its residents to collect tax from these profit beneficiaries individually. (P.S But this method has its own flaws, like business owners need be taxed at a extremely high rate to match the loss of separate taxes, and this will piss off a lot of powerful rich folks. And also may results in having opposite effect due to the loss of tax revenue bases, rich people tend to avoid tax better.)

I think it just calls for an international organization to mediate and centralize the taxation of multi-national corporations' profits.
...

The international economic entities like G20 already doing this for years, and trying to balance the economic profits between powerful economic countries. And different associations of countries are doing the same as well, exempt tariffs within them, but integrated the tax revenue of their member countries.

About wages and inflation in consumer price, its a greater issue involving the markets (labor and commodity) and economic structures. And its related to an assumption of wage rigidity, and there are different theories to explain why efficiency wages are not achieved. It's on going research fields, and many include more than economic reasons/factors.